UK’s CVC busy putting its stamp on Europe’s postal industry

Private equity group CVC is busy putting its stamp on Europe’s postal industry. This summer it bought 22percent of Post Danmark and yesterday the two jointly took a 50percent stake, less one share, in Belgium’s postal operator, De Post-La Poste. What the two appear to be offering is a combination of CVC’s financial clout and Post Danmark’s industry expertise. Both are vital in an industry where liberalisation is the name of the game and country monopolies look headed for the bin. At the same time the CVC/Post Danmark model appears to offers the prospect of continued state control – and politically sensitive social responsibilities – alongside much needed cash for investment.

Is it too good to be true? For trade secretary Alan Johnson, mulling options for Royal Mail, the answer is likely to be yes. Even CVC would blanche at the huge investment needed to modernise Royal Mail and make a meaningful dent in its pensions deficit. And opening Royal Mail to private equity would send the political temperature soaring.

Within the framework of the existing CVC postal deals there are questions to be answered. At some point CVC will want an exit. The stock market offers one route – but does not offer a solution to the anomaly of a listed company with majority state control, a hatful of social responsibilities and private sector competition. Nor does a trade sale look more promising. The number of potential buyers would be limited and liberalisation could well end up in consolidation.